Selection Sets Off Debate on Government

WASHINGTON—Amid growing complaints about the pettiness of American politics, the 2012 presidential campaign is turning into a far-reaching, big-picture debate over the size and scope of government.

Mitt Romney's choice of Rep. Paul Ryan of Wisconsin, an uncommonly assertive spokesman for free markets and small government, to be his running mate on the Republican ticket has highlighted the differences between them and President Barack Obama—and nowhere is the clash more apparent than on the subject of Medicare.

The economy is expected to play a big part in the coming election. But how might the Romney-Ryan ticket frame the debate over the fiscal cliff? Janet Hook discusses on Markets Hub. Photo: AP.

The selection of Paul Ryan ensures that the campaign will be a battle of big ideas over the role of government in the 21st century. David Wessel has details on The News Hub. Photo: Getty Images.

Until now, in a 2012 campaign bristling with negative attacks and accusations about the character of the two candidates, big policy choices have been eclipsed.

That changes with the selection of Mr. Ryan, author of detailed conservative budget plans that call for major changes to many social programs, offering voters a choice: Are welfare services a safety net, or can they breed dependency? Is Medicare a social contract with the elderly, or unsustainable and in need of repair? And will cuts in government spending hurt economic growth, or foster a more robust private sector?

Paul Ryan's Career

"It's very rare that candidates go one-on-one with each other over a wide range of policies," said Robert Reischauer, a former congressional Budget Office director, a Democrat and among the trustees of the Medicare and Social Security Trust Funds.

"With Obama, you have the gradualist incremental approach: Preserve what we have that's good, modify it to reflect the constraints and needs of the 21st century," he said. "On the other side, Romney and Ryan [offer] a more radical transformation of the role of government and the nature of our large public policies."

The selection of Mr. Ryan offers "the chance to make the election about big things, not small things," said Kansas Gov. Sam Brownback, a Republican and former senator on whose staff Mr. Ryan once worked.

ENLARGE

'This is a choice about two different visions,' President Obama said Sunday.
Reuters

Mr. Ryan's position on Medicare—the government's insurance for the elderly and disabled—carries considerable political risk. More than one in seven Americans is covered by the program, and liberal groups and many Democrats have attacked the Ryan Medicare proposal for months: One advertisement had a Ryan look-alike pushing a wheelchair-bound elderly woman off a cliff.

The GOP ticket is defending its ideas robustly. "What Paul Ryan and I have talked about is saving Medicare, is providing people greater choice in Medicare, making sure it's there for current seniors," Mr. Romney said Sunday in an interview aired on CBS' 60 Minutes. "No changes, by the way, for current seniors, or those nearing retirement. But looking for young people down the road and saying, 'We're going to give you a bigger choice.' "

Get the latest news, tweets, photos, video and more on the 2012 election, from the Journal's reporters in Washington and around the nation. Perfect for mobile phones, too.

Medicare is projected to grow in cost every year going forward. Mr. Obama says he would use the power of government to reduce provider payments and to give them incentives to provide care more cheaply in a government-run program.

Mr. Ryan, in a plan Mr. Romney has embraced in principle, would instead give seniors a government subsidy to choose among competing insurance carriers. The plan would affect Americans younger than 55, as they would be the ones faced with the choice.

To bring down the deficit, Mr. Ryan would cap the growth of Medicare program after 2023 so that it wouldn't exceed the growth of the economy plus an additional 0.5% a year, a restraint that his critics say would push more of the costs onto beneficiaries.

Mr. Ryan's plan would save $205 billion compared with the White House's budget for Medicare over 10 the next years, according to estimates provided in the two budgets. That is a fraction of the $4 trillion in deficit savings over 10 years that both parties have set as a goal. Republicans believe the cost savings from the proposed Medicare changes would be significant in subsequent years.

ENLARGE

Both parties say they welcome the prospect of the 2012 election becoming a referendum on contrasting approaches to the nation's problems.

"More than any other election, this is a choice about two different visions for the country, for two different directions of where America should go," Mr. Obama told voters Sunday in Chicago.

Mr. Ryan agrees. "We're in a different, and dangerous, moment," he said Saturday in Virginia.

Rep. Ryan has been popular within the small-business community, where he has cultivated ties and where his message of smaller government and reduced regulatory burdens has gone down well. The National Federation of Independent Business—which calls itself "the voice of small business"—gave him a score of 71 out of a possible 100 on congressional votes the organization monitored last year.

The Chamber of Commerce, which represents a broader range of businesses, gave him a perfect score of 100 for the same year. He has a lifetime rating of 90 on the Chamber's scorecard through last year.

Mr. Ryan's budget plans have stirred some anxiety among business leaders who fear they will lead to a loss of tax breaks and government grants big businesses, in particular, find useful. Still, business organizations generally have rallied behind his ideas.

The Business Roundtable, for example, praised his budget blueprint by saying it "focuses the policy discussion on the importance of entitlement reform in putting America's budget in order for the long term." The National Association of Manufacturers earlier this year called his budget "a credible, fiscally responsible budget plan that will pave the way for durable economic growth and job creation in the United States."

The debate over the size of government has been raging for decades, but Ronald Reagan in his successful 1980 race may have been the last presidential candidate to campaign on it as a dividing line between the parties. President Bill Clinton deliberately sought to blur partisan differences on the issue when he declared, "The era of big government is over." His successor, George W. Bush, was seen as a "big government" conservative. And in 2008, Mr. Obama and GOP Sen. John McCain argued more over who was better equipped to change government than over what size it should be.

The small-government wing of the GOP moved to center stage in the 2010 midterm elections with the rise of tea-party activists. The explosion of federal debt has increased pressure on politicians to decide which functions of government are indispensable and which should be dialed back.

The differences between the two presidential candidates in 2012 are stark. Mr. Obama argues the government needs to spend about of 22.5% of the country's gross national product to protect today's citizens and invest for tomorrow's. Mr. Romney sees that level of spending as unnecessary and unwanted. He would cap government at 20% of the economy. Each percentage point of GDP is about $150 billion. Since 1970, government spending as a percentage of GDP has averaged just under 21%.

Mr. Romney has developed a plan to partially privatize Medicare that mirrors Mr. Ryan's in most, but not all, respects. He hasn't embraced the bill Mr. Ryan shepherded through the House earlier this year that would fend off year-end cuts in military spending by squeezing from food stamps and other social-safety-net programs.

Even after selecting Mr. Ryan, the Romney team has kept some distance from the details of the Ryan budget, which has been backed by the Republican-controlled House. "It is the Romney/Ryan ticket, and as president, President Romney will be putting forward his own budget," said Ed Gillespie, a senior campaign adviser Sunday in a CNN interview.

But Mr. Gillespie also said, "If the Ryan budget had come to his desk as president, he would have signed it, of course. And one of the reasons that he chose Paul Ryan was for Congressman Ryan's willingness to put forward innovative solutions in a budget."

The 2012 election comes against the backdrop of a smoldering fiscal crisis in Europe that has offered fodder for both campaigns. High public or private debt in Greece, Spain and Italy has driven up borrowing costs, spooked investors and toppled leadership. But many economists say austerity has contributed to recessions on the Continent and in the U.K.

The GOP Ticket

Several of Mr. Obama's signature legislative successes in his first term in office—the 2009 stimulus, the controversial health-care law, and the rewrite of financial regulation overhaul—expanded the role of government in the economy. His plan to reduce the deficit over 10 years combines spending cuts, tax increases, and modest changes to programs like Medicare and Medicaid. He has pushed for more people to be covered by government health insurance and for subsidizing some of those who buy private insurance, arguing that access to health care is part of the social contract the government has with its citizens.

It remains to be seen if the presidential candidates are willing to sustain a broad policy debate. "People are thirsting for somebody to feed them something besides BS and mush," said former Sen. Alan Simpson, Wyoming Republican who chaired a deficit-reduction panel appointed by Mr. Obama.

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.